Frequently Asked Questions

These answers have been prepared in response to questions raised by actors involved in the implementation of Axis 4 of the EFF. These guidelines do not replace the basic legal texts. Interpretations given here do not prejudice a possible decision of the Commission or a possible judgment of the Court of Justice which alone is competent to give legal opinions on the validity and the interpretation of acts adopted by Community institutions.

OVERVIEW OF AXIS 4

Coastal areas cover 40% of the EU territory and contain 43% of its population. This includes some of Europe’s most competitive centres of economic growth as well as sought after locations for new leisure and residential developments. Such activities place enormous pressures on the natural environment and on traditional activities like fishing.

More remote coastal areas and other areas (including lakes, ponds and river estuaries) that are heavily dependent on fishing also face significant challenges. Restructuring in the fisheries and aquaculture sector, developments on world markets, dwindling fisheries resources and the need to exploit natural resources and the environment in a sustainable manner are all increasingly impacting on the viability of communities in these areas.

The Regulations for all EU Funds specify that there must be clear and transparent guidelines to prevent duplication and double funding. The "demarcation line" between different Funds has been defined for each country in the Operational Programme.

In fact many of the actions contemplated in Axis 4 could, in principle, be funded by other programmes such as LEADER or the ERDF. The main benefit of Axis 4 comes from bringing together a series of actions into a local strategy and mobilizing local actors into a partnership both of which are designed to meet the specific needs of fisheries areas.  It is a specific tool and approach to address these needs and to provide real added value in the fisheries area concerned.

The European Commission recognises that these complex and rapidly-evolving issues affecting fisheries areas and communities cannot be dealt with by traditional policies and tools on their own. It believes that because of the diversity of fisheries areas and of the problems confronting these areas, assistance should aim for an integrated local development approach, centred on a territorial strategy and adapted to the local situation. Therefore, under Axis 4, the design and implementation of the local development strategy is as decentralised as possible, with preference given to the involvement of private actors on the ground and a bottom-up approach.

There are five key features which characterise the approach promoted under Axis 4:

1. The local territorial approach: funds are concentrated on the fisheries areas that need them most and actions supported are designed to meet the diverse needs of these areas;

2. Integrated strategies: a local development strategy ensures that the actions undertaken reinforce each other, building on the unique strengths and opportunities of each fisheries area, and also addressing specific weaknesses and threats;

3. Participation and partnership: the strategy mobilises the knowledge, energy and resources of local actors from the public, private and community and voluntary sector, which come together to form the Fisheries Local Action Group (FLAG). The FLAG facilitates local decision-making on strategic priorities and on the use of resources to implement the strategy;

4. Local innovation: the strategy seeks to exploit new markets, new products and new ways of working, both in the fisheries sector and in other local sectors;

5. Networking and cooperation: fisheries areas and communities learn from each other and find allies for strengthening their position in a global economy.

Axis 4 of the EFF provides support for the sustainable development of fisheries areas. In particular, it supports initiatives aimed at adding value to fisheries products, as well as measures to promote economic diversification, particularly into areas such as tourism and leisure, food and renewable energy, which exploit local resources. It also supports other measures aimed at improving the quality of life in areas affected by the decline in fishing activities, such as small scale infrastructural projects, environmental protection and training and capacity building for local communities.

The EFF regulation does not restrict where a beneficiary of Axis 4 support should be based. It indicates (Article 45, paragraph 4) that “operations under the local development strategy shall be chosen by the group and shall correspond to the (list of eligible) measures provided for in Article 44”. However, the benefits of a project supported by a FLAG must accrue to the fisheries area by contributing to its sustainable development or improving the quality of life in the area (Article 43).
As such, notwithstanding any additional national rules, project beneficiaries (project promoters) can be based outside the area if their projects fulfill the above criteria. Examples of this may include supporting distribution channels for local catch in nearby market towns or cooperation projects in which the lead partner is based in another fisheries area.

 

Twenty-one Member States will implement this new priority Axis and between them they are expected to select approximately 200 FLAGs.

Axis 4 funding will be allocated to the selected FLAGs to support the implementation of their local development strategies. This funding will be used to support projects initiated by the FLAG itself, as well as projects conceived and implemented by local actors from the public, private and community and voluntary sectors.

FLAGs will be encouraged to learn from each other through interregional and transnational cooperation and exchange, which will be supported and assisted by the FARNET Support Unit.

APPROPRIATE BUDGETS FOR AXIS 4

The EFF Regulation does not specify a minimum budget for FLAGs delivering Axis 4. However, it does say that the FLAG areas must have ‘’sufficient critical mass in terms of human, financial and economic resources to support a viable local development strategy” (Article 45.3). This local development strategy must be based on the interaction between actors, sectors and operations and go beyond ‘’a mere collection of operations or a juxtaposition of sectoral measures” (Implementing Regulation Article 24). In other words Axis 4 is there to implement a genuine and integrated local development strategy not a single project or a cluster of projects in any one sector including fisheries, nor an aggregation of individual projects from across sectors.
Past experience in similar programmes like LEADER suggests that delivery of such a strategy is difficult to achieve with a total public budget per group of below €2 million for the whole programming period (EFF and national public co-financing). If the figure falls below €1 million the FLAGs might find that their activities tend to be limited mainly to soft or revenue funding measures and pilot projects in a limited number of fields.  

The delivery of any local strategy needs an organisation to manage and implement its actions. In order to be effective this organisation needs to have strong administrative and financial capacity. The EFF regulation limits, as a general rule, the proportion of the budget that a FLAG can spend on administration to 10% of the total public budget allocated to the group (Article 44.5). It is difficult to reduce this proportion as there are a number of essential or fixed human resource and financial costs associated with the delivery of strategies which are common to all groups.
In the case of very small budgets, the administrative costs are therefore likely to be disproportionate to the available resource. FLAGs with a very small budget will not be able to afford the human resources required for efficient administration, let alone higher level strategic functions such as community development, business advice or training. In that case, it will be essential to team up with another existing local body (Leader group, regional development agency, etc.) in order to share the burden of the administrative cost and benefit from their experience (see below). If this is not possible, the 10% limit can, in any case, be exceeded as long as this is specified in the Operational Programme.



Because of this situation, the European Commission recommends Member States either reducing the number of FLAGs foreseen or transferring further funds to Axis 4 to ensure that the budgets per group are sufficient to fund a viable local development strategy.  A higher national public co-funding could also be an answer to these limitations.

Member States that have allocated small budgets to the FLAGs, and cannot increase them in the ways described above, can generally explore the following alternatives for reducing the negative consequences:
•    Firstly, the strategy for Axis 4 may be developed and implemented in such a way as to form part of a broader integrated strategy for the territory which is funded from a range of different sources. These funds may include a range of domestic resources, the other axes of the EFF, LEADER and the EAFRD, the ERDF and the ESF. In some cases Axis 4 may be focused on the soft measures and human resources that are used to generate the ideas and projects that can then lever in funds from outside the axis.
•    Secondly, FLAGs may seek to share the human resources, services and facilities of existing experienced local organisations (especially, but not only, LEADER groups) thereby achieving economies of scale.
Both approaches do however involve the risk that the specific value added of Axis 4 is diluted and absorbed into strategies and organisations that do not have the same level of concern for fisheries areas and communities. Member States taking this approach should demonstrate that they have established appropriate safeguards and conditions to ensure that this does not happen.

There are risks associated with budgets that are disproportionately large in relation to the size of the area, its experience of local development and the readiness of local projects. The imperative to commit budget and spend may impact on the mix of project types, project promoters and beneficiaries. If the budget is very large, then there is a strong risk that, in order to achieve budgetary targets, resources will be switched into larger scale public infrastructure projects having little connection with the strategy for Axis 4.

A critical factor here is that bottom up projects forming a local development strategy usually take time to mature. This is particularly the case for the private and community based projects, which according to the EFF Regulation (Article 45.4) are expected to represent the majority of the operations.

At the selection stage, one of the criteria for assessing the strategies of the FLAGs should therefore be that the actions and resources foreseen are realistic and in proportion to the needs and capacity of the area to absorb them, particularly with regards to the feasibility of obtaining the minimum private co-financing required for certain projects.

The Regulation clearly states that the majority of the operations should be led by the private sector. This means that over 50% of the projects supported by the FLAG should be allocated to representatives of the private sector acting as project leaders, although this does not mean that the majority of the budget comes from the private sector. Practically this entails that more than half of the grant contracts should be signed by the representatives of the private sector (incl. NGO/ civic sector).

However, some Member States have interpreted this phrase as meaning that the majority of the budget should come from the private sector, in addition to the majority of projects. The Commission encourages this more ambitious approach since Axis 4 aims to stimulate bottom up initiatives from the private sector and to lever in as much private funding as possible. Therefore, ways of increasing private financial contributions should be investigated and encouraged. This could be done for instance by using the commitment of local private investors to contribute to the financing of the local strategy as a criterion for FLAG selection.

Can actions led by community groups (NGO’s, social organisations, citizens’ associations, etc.) be considered as private sector
Yes. Many of the most vulnerable fisheries areas lack the physical, human and social capital required to attract private investors. In these cases civil society initiatives of a more social and environmental kind may act as essential drivers of longer term change, making areas less dependent on public subsidies. These kinds of actions naturally find their space in a fisheries area's strategy and should be supported.
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HOW TO SELECT FISHERIES AREAS

The EFF Regulation allows considerable flexibility in both the size and definition of fisheries areas. It says that the “areas must be limited in size and, as a general rule, smaller than NUTS 3” (Article 43.3).  In addition “The priority areas should either have a low population density or fishing in decline or small fisheries communities” (Article 43.4).
Within these limits there is no ‘one size fits all’ rule, and Member States are given the responsibility of deciding on the most appropriate areas. Importantly, the Regulation adds later that “The area must also be sufficiently coherent and have sufficient critical mass in terms of human, financial and economic resources to support a viable local development strategy” (Article 45.3).
In other words, the size of the area and its boundaries should be appropriate to the aims of the strategy developed by the partnership at local level – neither so big that it dilutes the impact of Axis 4 nor so small to that it is not viable.

No, geographical continuity is not an obligation but there has to be a coherence between the different parts that make up the FLAG. This may be defined in terms of their common involvement in certain activities, certain common threats or opportunities and not necessarily in terms of physical continuity.

Experience e.g. from LEADER shows that a lack of continuity can make it extremely difficult to develop and deliver an effective strategy and partnership. So while not being an obligation, geographical continuity can be a key determinant of success.

The territories covered by FLAGs can also cut across existing municipal, provincial or regional administrative boundaries. This can make it easier to define areas which have critical mass and are coherent in economic, social or physical terms. However, once again the FLAG needs to weigh up these advantages against the additional complexity that this can create in dealing with many administrative bodies.

There is a risk that the pre-selection of areas reduces the ability of the FLAGs to adapt their areas and strategies to local realities. However, it is important to be realistic and to ensure that the areas have sufficient critical mass and that the strategy has sufficient resources to achieve its aims.

A common solution to this situation is to define broadly certain priority types of eligible areas but then to allow the FLAG to adapt the boundaries of the area as a result of the bottom up analysis and the strategy that they develop.

The EFF Regulation allows the Member States a considerable amount of freedom to choose the best approach for their country. However, any approach chosen should comply with the provisions of Article 43(3) and (4) of the EFF which lay down the criteria for fisheries areas under Axis 4.  Member States are free to further target the scope of fisheries areas by adding additional criteria. However, Article 22 of the EFF Implementing Regulation also specifies that procedures and criteria for selecting fisheries areas must be described in the Operational Programmes. Such criteria must allow for an objective and transparent selection of areas.

The approach taken varies in different parts of the EU but in all cases the general conditions provided in the EFF Regulation apply:

  • Some countries use additional criteria to pre-select specific types of eligible areas most in need before launching the selection procedure for the FLAGs,
  • While others use only the EFF criteria with some of them having a completely open procedure where the whole country is eligible and the FLAGs themselves propose the boundaries of their area of intervention.

There are both positive and negative points associated with all approaches. For example, if the whole country or coast is eligible, then the groups themselves are able to suggest areas which correspond to “bottom up” concerns and which may be more coherent in economic, social or geographic terms.  However, there is a real risk that too many areas are chosen or the areas are too large and the budget for Axis 4 is diluted. Here targeting priority areas can help to avoid wasted effort by prospective groups for whom there is insufficient budget. It also avoids political pressure from a large number of groups to spread the budget too thinly. This is why many countries have taken this

PARTNERSHIPS

The legal structure of FLAGs can vary enormously depending on the administrative tradition and legal framework in each country. In some countries, FLAGs are civil associations, in others they are non profit making private or public companies. Elsewhere FLAG partnerships do not have a separate legal entity and are part of existing local development organisations but with a clear separation of the strategy, decision making structure and accounts for Axis 4 from the other activities.

Whichever approach is chosen in a country it is essential to ensure that the FLAG has the qualified staff and management systems required to ensure effective financial and administrative management. Article 23.2 of the EFF Implementing Regulation allows for two ways of achieving this. One method is to nominate one experienced partner as the administrative and financial leader supporting the administration of the FLAG. The second is to create a separate legal entity which can show that it collectively has the administrative capacity to manage the project.

In either case, FLAGs should maintain the flexibility required to adapt the strategy to local circumstances. One of the keys to the success of Axis 4 is the partnerships which must be able to respond faster and more effectively to local needs than more traditional methods. If the FLAG simply becomes another layer in an administrative hierarchy then much of the added value is lost and the entire approach is called into question.


According to the Regulation, responsibility delegated by Managing Authorities to FLAGs shall provide that:  
a) the FLAGs “propose and implement an integrated local development strategy based upon a bottom-up approach” (article 45.2) and
b) “the operations under the local development strategy are  chosen by the local group” (article 45.4).
While the Managing Authority needs to agree the strategy and should check the eligibility of the local operations – the responsibility for taking the initiative on both must clearly lie at local level.

As long as these basic principles are respected Member States have considerable flexibility in the way in which they delegate other functions. For example, at one extreme, some Member States transfer the funds for Axis 4 directly to the groups who become responsible for certifying and paying beneficiaries. At the other extreme, the funds as well as the certifying and paying functions can be retained at national, regional or provincial levels.

The decision about exactly which functions to delegate depends on the administrative capacity of the local partners in the FLAGs and, on the speed and effectiveness of higher levels of the administration in getting the payments to the final beneficiaries. Both vary considerably between countries. If a Member State does sub-delegate more functions to the FLAGs it must make sure that they have the necessary human and financial resources to carry them out. If, on the other hand, payment to beneficiaries are effected by another entity (e.g. a national or regional agency), the systems for checking eligibility should be streamlined so as to avoid duplication of controls.

FLAGs need to establish clear, transparent and objective criteria and robust procedures for local project selection. In general, the projects selected should serve as examples which mobilise local actors to take further initiatives and, in turn, contribute to the local strategy. This will only happen if local actors see that the projects have been chosen on the basis of a sound and fair procedure which has been discussed and agreed among the partners representing them. The procedure and the selection criteria should be publicly available documents.

The exact procedures and criteria will vary considerably according to national and local contexts and to the nature of the projects. Some strategic or collective projects (e.g. a maritime museum) may be initiated and implemented by the FLAG itself. In other cases, the FLAG will issue periodic or open calls for proposals from potential local beneficiaries.

The decision making system used by the FLAGs will vary with both the national and local context. Some organisations use systems based on ‘one member one vote’ and/or insist on unanimity. In others, the votes are proportional to the weight of the partners within the community and there is a greater use of majority voting.

It is important for the local community to be able to see that the system is fair, transparent and efficient, and that there are safeguards preventing undue political, financial and personal influence.

Another issue that needs to be clearly defined is the division of responsibilities between elected partners and full time staff. The normal approach is for the staff to be responsible for the appraisal of the project (ensuring its technical competence, eligibility, realism etc) and for the partners to be in charge of decision making on the basis of recommendations made by the technical team.

Article 45 of the EFF regulation indicates that Axis 4 shall be implemented by “local entities or groups (the group) representing public and private partners from the various local socio economic sectors…” While it is understood that most partners of the group will be based in the fisheries area, certain local socio economic sectors may be represented by an organization based outside the FLAG area. This may be the case for certain local fishing, net-mending or women´s associations, for example, whose members are active in the FLAG territory but also in neighbouring territories. As a result, although the legal seat may be outside the FLAG territory, their membership in the group might still be considered relevant, and even essential. The same might be the case for nearby research centres whose work concerns the area, or for certain public actors whose intervention scope includes but might be broader that just the FLAG territory. As is the case for all their members, groups should be able to justify what each member brings to the partnership. The composition of the partnership, as well as the local development strategy, is taken into account by the managing authority when selecting the groups.

The EFF Implementing Regulation states that “the partnership shall comprise, including at the decision making level representatives of the fisheries sector and of other relevant local socio-economic sectors” (Article 23). No precise numbers have been given as to the representation of different stakeholders on the partnerships precisely because the philosophy behind Axis 4 is that the composition of the partnership should be adapted to local circumstances. There is no ‘one size fits all’ solution, it depends on the specificities of the area. Its membership should however have access to adequate administrative and financial capacity to administer the assistance and ensure that the operations are completed successfully.  

Nevertheless, the following guiding principles can be deducted from the Regulation.

  • Firstly, the Regulation says that more than half of the operations shall be led by the private sector. This commitment should preferably be reflected in the composition of partnership. So while local municipalities and public sector bodies are central to the partnerships they should not be in a position to dominate. Private sector representatives (including representatives of the fisheries sector) and civil society organisations should be represented on equal footing with the public sector.  
  • Secondly, the representatives of the fisheries sector are an obligatory and, in many cases, leading component of the partnership. However, the essence of the partnership is to forge local alliances and mobilise support around common goals with decisions taken on the basis of a real negotiation between the partners. Therefore, a golden rule is that a single group of stakeholders should not have more than 50% of the votes. Where possible, the composition of the partnership should reflect the socio-economic make up of the fisheries area.

STRATEGIES

In the EFF Regulation the term “critical mass” is applied to the territory covered by the FLAG. This should “be coherent and have sufficient critical mass in terms of human, financial and economic resources to support a viable local development strategy” (A45.3).

In other words, critical mass refers basically to the relationship between the size of the area (in physical, population and economic terms) and the resources available to the FLAG through Axis 4 (both financial and human). The key test is that both the area and the resources available through Axis 4 have to be sufficient to support a viable local development strategy. There needs to be enough “critical mass” to realistically achieve what is proposed in the strategy.

If the area is too small, it is likely to be difficult to find the private resources, human capital and experience to implement the strategy. If, on the other hand, the area is too large, the impact of Axis 4 is likely to be insignificant in relation to the problems of the area.     

The preparation of strategies by the FLAGs and the processes involved in their development should be seen as one of the most important contributions made by Axis 4. Their real value lies not so much in the technicalities of the strategy but in the fact that they have been discussed and worked through in a bottom-up way with all the main stakeholders in an area from the very beginning.

The strategies should be seen as far more than a formality for obtaining a limited amount of funding and rather as the foundation stones for a sustainable process of local development which extends beyond the programming period in both time and scope. In this sense, one of the most valuable investments that Axis 4 can make is in community training and building the capability to act.  

Member States appear to be following two main types of capacity building processes. Those possessing a well developed network of experienced local development actors have often launched a one stage call for proposals for the areas, groups and strategies. Support for this existing capacity is provided through information meetings, campaigns, websites, explanatory manuals, training sessions and expert support at the local level. An example of this type of approach is France .

Many countries with less experience of integrated local development strategies have preferred to organise a two stage selection process. This involves a list of potential areas and / or groups which are preselected on the basis of a relatively light call for expression of interest. These groups thus selected then benefit through the provision of a programme of training, mentoring and expert support to help set up the partnership and develop the strategy. An example of this kind of approach is Estonia.

Given the lack of experience of many of the actors involved in Axis 4 in integrated local territorial development, the use of national technical assistance (Axis 5) is not only desirable but, in fact, essential for success. The Commission strongly recommends that technical assistance for Axis 4 be deployed as rapidly as possible at national or regional levels. For example this may be used to directly provide expert support for capacity building, in effect constituting direct support for the development of partnership, community engagement and the area strategies.

In countries with a relatively large number of groups the TA should be used to provide resources for an Axis 4 Network of FLAGs which collaborates with the European FARNET Support Unit. This has been specified in the OPs and should be implemented rapidly.

In general, no. The individual operations or actions financed by Axis 4 should be selected by the FLAG on the basis of open and transparent selection procedures and criteria. The inhabitants of local fisheries areas should have a fair opportunity to apply once the strategy has been approved. In the planning phase of the strategy, it is normal for examples and types of projects to be discussed but no individual projects should be pre-selected before the FLAG has been approved.

One exception to this general rule is where the FLAG proposes certain strategic collective projects within the overall strategy in pursuit of the objectives; these are in effect approved along with the strategy itself.

ELIGIBILITY

Article 55.2 of Regulation 1198/2006 on the European Fisheries Fund states that "in-kind" contributions, depreciation costs and overheads may be treated as expenditure paid by beneficiaries, provided that this is permitted by the rules of eligibility defined at the national level.

The beneficiaries of Axis 4 are usually local actors, many of whom (including the FLAGs themselves) may have restricted access to sources of finance. This may be due to their small scale, the nature of the organisation they belong to, the very needs which their project seeks to address or other demands or commitments on their financial resources. The financial crisis has placed severe restrictions on many sources of funding and this is impacting on the ability of many project promoters to access finance. Where project promoters are required to provide a certain amount of "own (match) funding" to projects financed from Axis 4, they may therefore not have the capacity to provide all of this contribution in cash (i.e. expenditure which may be documented).

One possible solution for Axis 4 beneficiaries is that the Managing Authorities allow part of their own contribution to be provided in the form of an "in-kind" contribution. By "in-kind" contribution we mean that a third party puts a physical product/ tangible asset or a service at the disposal of the beneficiary for free. Therefore an "in-kind" contribution does not entail a cost to the beneficiary and is not registered in its accounting. It should be borne in mind that the use of paid staff of the beneficiary does not constitute an “in-kind” contribution, since the remuneration of this staff involves a cost to the beneficiary.

EFF Article 55.2 requires that the following conditions be satisfied for “in-kind” contributions:
-    The amount of expenditure covered by such contributions is justified by accounting documents having a probative value equivalent to invoices, and
-    Such contribution do not result in a net financial benefit to the beneficiary (no cash can be drawn against the "in-kind" contribution); this means, for instance, that a project with a total budget of EUR 100, of which EUR 60 is contributed in kind, with an aid intensity of 50%, will not obtain EUR 50, but only EUR 40 public contribution.

It should also be borne in mind that the rules of implementation of the Financial Regulation   (Art. 172) specify that - if the physical product/ tangible asset represents a cost supported by the third party - the value of the "in kind" contribution must not exceed the costs actually borne and duly supported by accounting documents of the third party; if the physical product/ tangible asset does not represent a cost for the third party, the value of the "in kind" contribution must not exceed the costs generally accepted on the market in question (e.g. for voluntary workers). Moreover, the value of such a contribution should be fixed at the moment of the grant approval and should not be re-valued at a later stage. Finally, it excludes that contributions in the form of real estate (e.g. provision of office space) be considered as eligible costs.

It is recommended that the programme authorities provide the beneficiaries with clear and explicit guidelines specifying the types of costs that may be covered by "in-kind" contributions, the above-mentioned restrictions on such contributions, the acceptable bases of justification and the required format for the reporting of these costs by beneficiaries and/or FLAGs, as well as the limits concerning the maximum amount of "in-kind" contribution which programme management authorities may decide to set.

Such guidelines should in particular require that:  
-    The beneficiary demonstrates why it is justified and appropriate to provide an "in kind" contribution, why this contribution is clearly additional and why it provides real benefits to the project which would not otherwise have been achieved;
-    The calculation of the value of "in-kind" contribution is fully justified in the project application/budget;
-    The final amount of grant is conditional on the beneficiary providing proof that the declared "in kind" contribution has actually been provided (depending on the nature of the contribution this could include timesheets showing voluntary labour contribution, invoices or statements of expenditure by third parties, photos of events showing equipment made available, etc.).

Art. 40.2 from the EFF regulation 1198/2006 states that “operations may not … make reference to specific countries or geographical areas, except in case of products recognized under the terms of Council Regulation (EC) N° 510/2006…”. This means that unless a Protected Geographical Indication (PGI) or a Protected Designation of Origin (PDO) has been granted to the local product, the EFF cannot be used to finance promotional operations indicating the geographic origin of the product.

The EFF can, however, support the development of such official labels. The EFF can also support the development and promotion of local products as long as it does not finance those operations which directly concern the design or use of a specific geographical reference. For example, the EFF can support the investigation required for preparing quality charters, improvements in the production or presentation of products, market research and so on.

It should also be noted that the mention of the project promoter is allowed, as long as it only serves the purpose of identifying the responsible entity behind the project. In addition, for certain products, the mention of the catch area is actually an obligation required by EU market legislation (Council Regulation (EC) N°104/2000).

With regard to Article 44 (1) (i), all measures supported under this section can only be implemented as part of the local development strategy, i.e. only by groups. Therefore, operations concerning the creation of an individual local group and strategy (for instance the administrative costs of constituting the group, or the cost of experts helping to draw up the strategy) are eligible under Axis 4. However, only those groups that are finally selected will see these costs become eligible under Axis 4 as part of their local development strategy.  

Member States may also provide support for the acquisition of skills and preparation of the strategies using a separate measure under Axis 5. This could also support wider awareness raising activities, conferences, facilitators etc. This support will have to be made available to all interested territories via a transparent procedure.

Studies can only be covered by Axis 4 if they are in line with the local development strategy and actually relate to or are part of a particular project within this strategy.

There are two possibilities: If the FLAG's decision-making body decides to support a specific study this becomes a specific Axis 4 project which can be undertaken by one of the partners or by a third party. If the FLAG staff undertakes the study this would be covered by the running costs of the FLAG.

If a certain study is of interest for the operational programme in general it can be paid by Axis 5 (Member States' technical assistance).

FINANCE AND ADMINISTRATION

Introduction and definition

A conflict of interests arises where the impartiality or objectivity of someone involved in any way in making, influencing or preparatory actions leading to a decision is compromised by their own interests or any shared interest with an applicant (1). There is an inherent risk of conflict of interests within a FLAG where the method depends on partnerships comprised of interested local actors and local decision-making re applying resources to locally defined needs. The Financial Regulation specifies that steps be taken where a risk of conflict of interests arises, this involves excluding the individual concerned from the process. FLAGs must therefore be aware, plan, design and employ robust and transparent procedures to manage and record their decision-making processes and thereby avoid any actual conflicts of interest arising.

Relevance to Fisheries Local Action Groups

The risks of conflicts of interests arising in FLAG decision-making was highlighted by the European Court of Auditors special report (2) on Leader implementation. The Court found that ‘given the local nature of LAGs, one of the greatest risks for efficiency, the added value of the Leader programmes and for the reputation of the EU is that of a conflict of interests, whereby a project promoter may influence the project selection decision in their favour. The risk is heightened in LAGs that do not have transparent, objective and well-documented procedures.’
The Court highlighted the need for robust procedures evidencing and recording their project selection and decision-making processes to be in place, implemented and documented demonstrating that the LAGs ‘took decisions on an objective basis, free from conflicts of interest’.
It is therefore essential that FLAGs avoid such scenarios and set out not only the way in which decisions are to be made but also how this will be robustly and transparently evidenced and recorded. This is of the utmost importance where a FLAG partner is the project promoter.

Conflict of interest procedures

Project selection procedures should set out the decision-making process and the decision-making criteria to be employed. This should clearly identify the sequence of events and who is involved at each stage of the process. The use of a flow diagram is a useful way of representing this clearly.
Adequate separation of responsibilities must be maintained between the different elements of the process to ensure transparency in decision-making and to avoid any potential conflict of interests. FLAGs should therefore describe their procedure for avoiding conflicts of interests; this must be consistent with the provisions of Council Regulation No 996/2012 Article 57.
In general terms the following principles should be observed as a minimum:
- the submission of projects by FLAG members should only occur when this is in the interests of the territory and the delivery of the local development strategy and where the involvement of the partner is essential to the project’s viability or success;
- those involved in project development should not be involved in any way in project selection;
- staff should only undertake technical appraisals or offer technical advice on a project;
- anyone involved in project assessment or selection with an interest in a project (as defined under the Regulation) should declare that interest and withdraw from any involvement in the FLAG’s consideration of the project and the decision-making process in accordance with the FLAG’s procedure for avoiding conflicts of interest; and
- a register of FLAG members interests should be prepared, this should record the nature of any link between a member of the selection committee and a project or any applicant.

The ‘four eyes’ approach whereby every decision is seen by at least two people independently is recommended.

Involvement of the MA

Where FLAGs are unsure as to whether a project presents a risk of a conflict of interest it may be referred to the Managing Authority for an opinion. Responsibility for ensuring that any such conflict is avoided rests solely with the FLAG.


[1] Article 57 REGULATION (EU, EURATOM) No 966/2012 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 25th October 2012

[2] ECA Special Report No 5/2010 — Implementation of the Leader approach for rural development

Article 44.5 of the EFF Regulation states that running costs for groups may not exceed, as a general rule, 10% of the total budget allocated to a fisheries area but that "by way of derogation, Member States may decide to exceed this threshold on a case by case basis, in particular when the groups cannot be established on the basis of existing experienced organisations."

However, conditions justifying when FLAGs may exceed the 10% threshold must be indicated in the Operational Programme (if necessary following an appropriate OP modification), according to point 6 of Annex I of the EFF implementing regulation (EC) No 498/2007. The Member State will also be expected to set a maximum threshold for running costs (e.g. 25%).

Examples of conditions under which Member States may feel it is necessary to allow FLAGs to exceed the 10% limit for running costs include:
• Where a FLAG has not been established on the basis of an existing structure (c.f. Article 44.5) and thus running costs cannot be shared with other programmes such as Leader.
• Where a FLAG has been allocated a relatively small budget, making the 10% for running costs insufficient for managing the FLAG.
• Where a FLAG is expected to continue into the next period and the Member State has only foreseen running costs until the end of 2013. The funding gap between the current programming period and the 2014-20 period needs to be avoided to ensure that local capacity is not lost.  An increase in the 10% threshold would allow them to pay running costs to FLAGs beyond 2013.

It should be noted that the 10% threshold refers only to running costs. Animation costs such as capacity-building activities and other activities designed to help potential beneficiaries to develop operations are not considered running costs and are therefore not subject to the same threshold. 

The EFF Regulation 1198/2006, in Article 44.1, mentions the different types of measures for which Axis 4 support can be granted. These include, inter alia:

(i) acquiring skills and facilitating the preparation and implementation of the local development strategy, and
(j) contributing to the running costs of the group.

Further, Article 44.5 specifies that "running costs for groups may not exceed, as a general rule, 10% of the total budget allocated to a fisheries area" (Managing Authorities may decide to exceed this threshold on a case by case basis, in particular if the groups are not set up on the basis of existing organisations. This has to be justified in the operational programme).

This means that activities related to the acquisition of skills (e.g. training) or animation of the community (information meetings, participatory strategic planning, salaries for project development officers etc.), even when carried out by the FLAG, do not fall under measure (j) but under measure (i) and are therefore not concerned by the 10% limit which applies to running costs. Running costs include expenditure linked to operating (i.e. office) costs, personnel costs (staff salaries, travel costs), costs linked to public relations and networking, etc.


According to section a) of Annex II of the EFF, indeed all the groups of aid intensities may be applied to axis 4 measures as defined in Article 44 of the EFF.

However, this section has to be read together with section b) of Annex II which makes clear that it is the responsibility of the managing authority to determine which aid intensities it applies for measures for the sustainable development of fisheries areas.

To this end, the managing authority has to take into consideration the following criteria, specified in section b) of Annex II:

  • Collective versus individual interest
  • Collective versus individual beneficiary (producers' organisations, organisations representing the trade)
  • Public access to the results of the operation versus private ownership and control 
  • Financial participation by collective bodies and research organisation.

These criteria should guide the managing authority in their decision on the level of public contribution for operations or types of operations.  As a rule of thumb one could say that those operations or types of operations that lead to a better achievement of the objectives of axis 4 should receive a higher level of public aid.

However, this discretion should only be applied to Article 44 measures. For measures which are defined under other axes of the EFF and which are implemented under local development strategies, the aid intensities laid down in Annex II for these measures must be respected. E.g. for productive investments in aquaculture or in processing and marketing the aid intensities of group 4 should be applied.

The EFF regulation states that running cost for groups may not exceed, as a general rule, 10% of the total budget allocated to a fisheries area (article 44.5).

Firstly, this means that exceptions can be made, i.e. Member States may decide to exceed this threshold, in particular when the groups cannot be established on the basis of existing experienced organisations. This has to be justified in the operational programme.

Secondly, the 10% limit is calculated on the basis of the total public budget allocated to a fisheries area, i.e. the public (EFF and national) money allocated to a group for the implementation of a local development strategy (c.f. Vademecum point 7.5.3.). This means that the private match-funding is not taken into account for this calculation.

Running costs are financed 100% from public funds, i.e. they fall within group 1 (aid intensity: 100%) of annex II of the EFF regulation.

To encourage project proponents to undertake the activities involved in such projects as soon as they have been approved, Managing Authorities in a number of Member Sates use the pre-financing payments received from the Commission (pursuant to EFF Art 81) to pay advances to the beneficiaries. These advances cannot be certified as incurred expenditure, since EFF article 78.1 stipulates that only expenditure that have actually been paid by the beneficiaries are eligible for a contribution from the EFF. This applies mutatis mutandi to pre-financing payments to FLAGs.

The final date of eligibility is 31 December 2015. This means that projects can be selected after 2013, but they have to be completely finalised (carried out, certified and paid) by 31 December 2015.

COORDINATION WITH OTHER PROGRAMMES AND EFF AXES

One of the main aims of Axis 4 is to develop integrated local strategies which cover the needs of the fisheries areas. These strategies must, therefore, take account of and look for synergies with measures being implemented by other axes of the EFF, other programmes such as LEADER and initiatives funded by other sources of European funding. The operations funded by Axis 4 should complement and, where possible, add value to these other initiatives avoiding duplication of actions funded by other sources.
Where a FLAG area overlaps with the area of a Leader LAG the local strategy should include a section on complementarity and synergy.
In fact, Axis 4 can make a major contribution by developing a strategy which provides a single coherent framework for all the operations being carried out in fisheries areas. The FLAG partnership can create the governance mechanism for integrating them on the ground.

FLAGs can play a useful role in helping project promoters in their area to access funding from other axes of the EFF by supporting them in preparing their applications.
Axis 4 should be used to support the implementation of local development strategies which aim at the broader socio-economic development of a fisheries area. The allocations for Axis 4 are limited and thus Axis 4 should focus on achieving its primary objective and finance measures eligible under the other axes only when it fits the local development strategy.  
If the SWOT and strategy for a specific area suggest that some of the measures of the
ther axes are useful for achieving the objectives of the local strategy they could be incorporated. Since this would mean that the operations corresponding to these measures would be approved by the FLAG as one of their projects and would be covered by the FLAG budget, a clear reference to the strategy should justify the use of Axis 4. In such cases all the rules and conditions envisaged in the EFF Regulation for these axes/measures must be respected (c.f. article 44.3).



COOPERATION

The EFF Regulation states that support for the sustainable development of fisheries areas may be granted for “promoting inter-regional and transnational cooperation among groups in fisheries areas, mainly through networking and the dissemination of best practice” (Article 44.1h). It does not restrict the type of entity or person that can lead or take part in cooperation projects on behalf of a given fisheries area.

Cooperation projects can therefore be carried out by any type of project promoter (beneficiary) provided that the project is in line with the FLAG´s local development strategy and that the activity is for the benefit the fisheries area. While many cooperation projects are carried out by the FLAGs themselves, in other cases the FLAG may consider another organization better suited to lead or take part in a particular cooperation project. 

These activities can be financed either by Axis 4 or by Axis 5.

In the case of Axis 4, Article 44 (1) (h) envisages two types of actions:
(1) interregional and transnational cooperation between groups, and
(2) networking between groups and disseminating best practices. Networking within Axis 4 refers to networking activities between a limited number of groups, the national networks being supported under axis 5 (see below).

Under axis 4 there are two possibilities for financing both types of actions (1 and 2):
(A) from the budget held by the groups (which needs to be clearly distinguished from the group's budget for the local development strategy) in cases where the MA has decided to decentralise the cooperation/ networking budget to the FLAGs, or
(B) from part of the Axis 4 budget held by the MA in cases where the MA has decided to administer the cooperation/networking budget centrally and disburse it to the FLAGs via open calls.
As far as Axis 5 is concerned, the Member States are encouraged to use it for the establishment of ONE national network which will comprise all the groups of the country. The national network will be the main counterpart of the EU-level network (FARNET), but it should also have other tasks, e.g.:
- preparing training programmes for the groups in the process of formation,
- collecting, analysing and disseminating information at national level on good practice which is transferable.
Axis 5 can also be used to provide technical assistance for pre-development of cooperation projects – see "How should technical assistance for pre-development of cooperation projects be provided?" on www.farnet.eu



It is expected that in the early years of Axis 4 implementation the groups will be occupied mainly with setting up their partnerships and implementing their first local actions. Fully developed thematic cooperation projects are likely to take some time to get off the ground.

However, activities such as structured study visits or staff exchanges, twinning, and other forms of peer to peer support can be considered as “cooperation projects”, provided they contribute to the capacity building of FLAGs and are in line with the local strategy. The groups could not be expected to cover these costs under their running costs, which are limited to 10% of the group’s financial allocation.

Article 44 (1) (h) of the EFF Regulation states that support for the sustainable development of fisheries areas may be granted for promoting inter-regional and trans-national cooperation among groups in fisheries areas, mainly through networking and disseminating best practice1 . This means that the transfer of knowledge from experienced to less experienced groups should be encouraged by covering the relevant costs (including for twinning actions undertaken by local groups) under Axis 4. Managing Authorities may also decide to provide the FLAGs with grants financed from Axis 5.


1 It is in this context that one should read the Vademecum (point 7.5.1) which states that cooperation should include the implementation of a „joint project” (rather than simply “an exchange of experiences”) – this means that the capacity building, networking and dissemination of best practice should take form of a joint project (with clear objectives, activities and time-frame) involving two or more FLAGs.

It is recommended that the preparatory phases of cooperation should be treated like any other non-productive project and be funded 100% from public aid (total public aid from EU, national, regional or local sources).

When cooperation reaches the actual implementation stage normal rules on aid intensity apply depending on the type of operation undertaken:
•    Cooperation projects should be funded 100% from public aid if they are non-productive projects (c.f. group 1 of annex II of the EFF Regulation).  
•    If a cooperation project involves the private sector and productive investment the adequate aid intensity (below 100%) will need to be defined according to the nature of the project (c.f. group 3 or 4 of annex II of the EFF Regulation).

When the cooperation budget under Axis 4 has been allocated to the group together with the budget for the local development strategy, it is likely that the ideas for cooperation have not yet been developed in detail. Therefore, there could be a need for a preparatory phase which should be supported within that allocation (100% of public funds). The MS is always able to provide further technical support using Axis 5.
When the cooperation budget is held centrally and is allocated separately via specific calls for tender, it is likely that projects presented for funding will have to be fully developed. To help the preparation of such projects, the MS can foresee to provide specific grants (100% public), using Axis 5.

The EFF Regulation states that support for the sustainable development of fisheries areas may be granted for “promoting inter-regional and transnational cooperation among groups in fisheries areas, mainly through networking and the dissemination of best practice” (Article 44.1h).

The EFF Regulation (Articles 43.3 and 4) simply states fisheries areas should be limited in size and, as a general rule, smaller than NUTS 3. The priority areas for assistance can either have a low population density or fishing in decline or small fisheries communities. They should be sufficiently coherent from a geographical, economic and social point of view.

From the Regulation, therefore, it appears that Axis 4 should support cooperation between these types of fisheries areas. This means that, where it is proved to be necessary, Fisheries Local Action Groups funded by Axis 4 could cooperate with “Axis 4 or LEADER like” groups in fisheries areas which fulfil the conditions above but have not actually been selected for Axis 4. 

In these cases, Axis 4 would only fund the actions corresponding to the groups and areas that have actually been selected by the programme.